11 General Counsel...1 WILLIAM BLUMENTHAL ,.11 General Counsel MAXINE R. STANSELL 3 MARY T. BENFIELD Federal Trade Commission 4 915 Second Ave.. Suite 2896 JOHN D. JACOBS CA Bar No

1 WILLIAM BLUMENTHAL General Counsel ,.11

-

MAXINE R. STANSELL 3 MARY T. BENFIELD

Federal Trade Commission 4 915 Second Ave.. Suite 2896

JOHN D. JACOBS CA Bar No. 134154 Federal Trade Comrriissiori 10877 Wilshire Boulevard, Suite 700

2005 OCT -6 12: 00

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

WESTERN DISTRICT

FEDERAL TRADE COMMISSION,

Plaintiff,

v.

PACIFIC HERBAL SCIENCES, INC., a California corporation;

NATURAL HEALTH PRODUCT, INC., a California corporation;

NEW STAR MARKETING GROUP,

INC., a California corporation;

JOHN A. BRACKETT, JR.,

individual1 and as an officer or director O ~ P A C I F I ~ HERBAL SCIENCES,INC.; and

LEI LU, also known as LEI LI, individually and as an officer or director of NATURAL HEALTH PRODUCT INC., and NEW STAR MARKETIN& GROUP, INC., and doing business as "IE MARKETING, INC.,"

Defendants.

COMPLAINT FOR INJUNCTIVE AND OTHER EQUITABLE =LIEF

FEDERAL TRADE COMMISSION 91 5 Second Ave ,Su 2896

COMPLAINT - Page 1 Seattle. Washtngron 98 174

(206)210-b350

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Plaintiff, the Federal Trade Commission (“FTC” or “the Commission”), for

its complaint alleges as follows:

1. The FTC brings this action under Sections 13(b) and 19 of the

Federal Trade Commission Act (“FTC Act”), 15 U.S.C. §§ 53(b) and 57b, and the

Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003

(“CAN-SPAM”), 15 U.S.C. § 7706(a), to obtain preliminary and permanent

injunctive relief, rescission of contracts, restitution, redress, disgorgement and

other equitable relief for Defendants’ deceptive and unfair acts or practices and the

making of false advertisements in violation of Sections 5 and 12 of the FTC Act,

15 U.S.C. §§ 45 and 52, and for violations of CAN-SPAM, 15 U.S.C. § 7701 et

seq.

JURISDICTION AND VENUE

2. This Court has jurisdiction over this matter pursuant to 15 U.S.C.

§§ 45(a), 52, 53(b), 57b, and 7706(a), and 28 U.S.C. §§ 1331, 1337(a), and 1345.

3. Venue in the United States District Court for the Central District of

California is proper under 15 U.S.C. § 53(b) and 28 U.S.C. § 1391(b) and (c).

PLAINTIFF

4. Plaintiff FTC is an independent agency of the United States

government created by statute. 15 U.S.C. §§ 41-58. The Commission enforces

Sections 5(a) and 12 of the FTC Act, 15 U.S.C. §§ 45(a) and 52, which prohibit,

respectively, unfair or deceptive acts or practices, and false advertisements for

food, drugs, devices or cosmetics, in or affecting commerce. The FTC is also

charged with enforcing CAN-SPAM as if statutory violations of CAN-SPAM

“were an unfair or deceptive act or practice proscribed under Section 18(a)(1)(B)

of the [FTC Act] (15 U.S.C. 57a(a)(1)(B)).” See 15 U.S.C. § 7706(a).

FEDERAL TRADE COMMISSION 915 Second Ave., Su. 2896 Seattle, Washington 98174

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5. Sections 13(b) and 19 of the FTC Act authorize the FTC to initiate

federal district court proceedings, in its own name by its designated attorneys, to

enjoin violations of any provision of law enforced by the FTC, and to secure such

equitable relief as may be appropriate in each case, including redress, restitution,

and disgorgement. 15 U.S.C. §§ 53(b), 57b.

DEFENDANTS

6. Defendant Pacific Herbal Sciences, Inc. (“Pacific Herbal”), is a

California corporation with its registered office at 330 Washington Boulevard,

Suite 508, Marina Del Rey, California 90292. Pacific Herbal transacts business in

the Central District of California and throughout the United States.

7. Defendant John A. Brackett, Jr. (“Brackett”), is an officer and

director of Pacific Herbal. Brackett has formulated, directed, controlled, or

participated in the acts or practices of Pacific Herbal set forth in this Complaint.

Brackett resides in the Central District of California.

8. Defendant Natural Health Product, Inc. (“NHP”), is a California

corporation with its registered office at 13300 Brooks Drive, Suite D, Baldwin

Park, California 91706. NHP transacts business in the Central District of

California and throughout the United States.

9. Defendant New Star Marketing Group, Inc. (“New Star”), is a

California corporation with its registered office at 13300 Brooks Drive, Suite D,

Baldwin Park, California 91706. New Star transacts business in the Central

District of California and throughout the United States.

10. Defendant Lei Lu, also known as Lei Li, and also doing business as

“IE Marketing, Inc.,” is an officer, director, and registered agent of NHP and New

Star. He was president of IE Marketing, Inc. (“IE Marketing”), a corporation in

both California and Texas, and registered agent of IE Marketing in California,

before that corporation was dissolved in both states. Lei Lu has formulated,

directed, controlled, or participated in the acts or practices of NHP, New Star, and


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IE Marketing set forth in this Complaint. Lei Lu resides in the Central District of

California.

COMMERCE

11. At all times material to this Complaint, Defendants have maintained a

substantial course of trade in or affecting commerce, as “commerce” is defined in

Section 4 of the FTC Act, 15 U.S.C. § 44.

DEFINITIONS

CAN-SPAM defines the following terms as follows:

12. “Electronic mail message” (or “email”) means a message sent to a

unique electronic mail address. 15 U.S.C. § 7702(6).

13. “Header information” means the source, destination, and routing

information attached to an electronic mail message, including the originating

domain name and originating electronic mail address, and any other information

that appears in the line identifying, or purporting to identify, a person initiating the

message. 15 U.S.C. § 7702(8).

14. “Initiate,” when used with respect to a commercial email message,

means to originate or transmit such message or to procure the origination or

transmission of such message. 15 U.S.C. § 7702(9).

15. “Procure,” when used with respect to a commercial email message,

means intentionally to pay or provide other consideration to, or induce, another

person to initiate such a message on one’s behalf. 15 U.S.C. § 7702(12).

16. “Protected computer” means a computer used in interstate or foreign

commerce or communication, including a computer located outside the United

States that is used in a manner that affects interstate or foreign commerce or

communication of the United States. 15 U.S.C. § 7702(13) and 18 U.S.C.

§ 1030(e)(2)(B).


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17. “Sender” means a person who initiates a commercial email message

and whose product, service, or Internet Web site is advertised or promoted by the

message. 15 U.S.C. § 7702(16).

DEFENDANTS’ BUSINESS ACTIVITIES

18. Since at least May 2003, and continuing to the present, Defendants

have marketed and sold dietary supplement products over the Internet, including

oral sprays purporting to contain human growth hormone (“HGH”), to cause the

body to produce HGH, and/or to produce effects similar in nature to those

purportedly produced by HGH. Defendants market the oral sprays under the

names “HGH Revolution,” “Natural Rejuvenator,” and others.

19. Defendants have marketed their oral sprays by, among other things,

initiating commercial email messages. The text of these messages contains

hyperlinks to, or directs recipients to the Internet Web site address of, Web sites at

which consumers can order Defendants’ oral spray products. Since February 1,

2004, consumers have forwarded to the FTC’s spam database (at [email protected] and

[email protected]) approximately 200,000 or more emails advertising Defendants’

oral spray products.

20. Defendants have advertised, offered for sale, sold and/or distributed

their oral spray products throughout the United States via dozens of Internet Web

sites, which fall into three sets:

a. One set consists of domain names registered by Defendant

Brackett on behalf of Pacific Herbal at which Pacific Herbal markets and sells

HGH Revolution. This set includes www.hghrevolution.com and

www.premierehgh.com, and the site at which consumers actually order the

product, www.pacificherbal.com.

b. At a second set of sites, Pacific Herbal, Lei Lu doing business

as IE Marketing, Inc., and NHP market and sell oral spray products under the

names HGH Revolution, Natural Rejuvenator, and others, which purport to consist


COMPLAINT - Page 5 (206) 220-6350

mailto:[email protected]:www.premierehgh.comhttp:www.pacificherbal.com

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of ingredients identical to those listed for HGH Revolution. These sites identify

the sellers or producers of the oral spray marketed and sold at these sites as IE

Marketing, Inc., and Pacific Herbal Sciences, Inc. Pacific Herbal responds by

email to orders placed at these sites, and the product received from these sites is

bottled and packaged identically to the product received in response to orders

placed at www.pacificherbal.com. The same Web sites also contain solicitations

to visitors to become distributors of the oral sprays, identifying NHP as the entity

soliciting distributors.

c. In the third set, the Web sites market and sell oral spray

products under the names HGH Revolution, Natural Rejuvenator, and others, and

make the same or virtually identical claims for the product as those made on the

sites referenced in paragraph 20.b, and listing most of the same product

ingredients. These sites have identified the sellers or producers of the oral spray

marketed and sold at those sites variously as IE Marketing, NHP, or New Star, or

have provided the address of NHP or New Star as that of the entity marketing or

selling the oral spray. As with the second set of sites, NHP is identified as the

entity soliciting distributors. The domain name registrations for many of these

sites have identified NHP or New Star as registrant or have provided an email

address for the registrant identical to one used to register a domain on behalf of

NHP or New Star. Products ordered from these sites are sent to consumers in

packages identifying NHP as the sender. The product label also refers to NHP.

21. To induce consumers to purchase HGH Revolution, Pacific Herbal’s

official Web site at www.hghrevolution.com makes the following statements.

a. The site’s “home” page states: “With HGH Revolution you can

boost your energy, burn off stubborn body fat, Increase [sic] lean muscle mass

faster, . . . , sleep deeper - feel more rested, and enjoy the freedom of Feeling and

Looking Great every day!”


COMPLAINT - Page 6 (206) 220-6350

http:www.pacificherbal.com

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b. Under the heading, “What Can HGH Revolution Do For

You?,” the site states:

Prescription HGH treatments have helped millions of men and

women reverse some of the key effects of aging, but such

treatments are very costly and invasive. Now, an all-natural

product like HGH Revolution can produce outstanding results

by enabling your own body to naturally produce more HGH.

This is done by a complex chain of Amino-Acids that trigger

IGF-1 (Insulin Growth Factor –1) production. IGF-1 causes

your body to produce more HGH and replenish cell structures

that otherwise would be left to age.

c. Under the headings, “How Does Buying HGH Change The

Lives Of Millions Of Men and Women” and “What Results Can I Expect?,” the

site lists additional purported benefits of HGH Revolution including, among

others, “Increased Energy Level, “Improved exercise capacity,” “Builds Muscle

tone,” “Better Mood and Emotions,” “Improves Immunity System,” and “Improves

Memory and Mental Focus.”

d. These claims are reinforced by references to studies

purportedly proving the claimed benefits. For example, on a page headed,

“Human Growth Hormone and Clinical Study Information,” and under the

heading, “How HGH Effects Anti-Aging,” the site lists several “Physical

Attribute[s]” with a claimed “Improvement” for each, including 88% improvement

in “Muscle Strength”; 71% improvement in “Healing Capacity”; 84%

improvement in “Energy”; 62% improvement in “Memory”; 86.8% improvement

in “Fatigue Reduction”; and 73.5% improvement in “Anxiety Alleviated.”

According to the site, “These results are from studies at the Medical College of

Wisconsin by Dr. Leon Cass Terry.” Also, under the heading, “Are The Results

Proven?,” the site states:


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Yes, millions of Americans are using homeopathic Growth Hormone

to slow, and in some cases, reverse the effects of aging. Numerous

studies have been conducted on the incredible properties of these

products.

22. To induce consumers to purchase oral spray products purporting to

contain, or cause the body to produce, HGH, Web sites operated by or on behalf of

Pacific Herbal, Lei Lu doing business as IE Marketing, Inc., NHP, and New Star,

make the following statements on the Internet Web sites listed in paragraphs 20.b

20.c and on other sites not listed:

a. The sites’ home pages typically state:

LOSE WEIGHT WHILE YOU SLEEP without DIETING

or EXERCISE. 100% SATISFACTION GUARANTEED.

b.

Experience up to an 82% IMPROVEMENT in body fat loss

while erasing 10 YEARS in 10 WEEKS!

The sites typically explain how the oral spray works as follows,

stating that “Until recently, growth hormone therapy has only been available in the

form of injections that are prohibitively expensive and difficult to use.” The sites

state that users can obtain the benefits of HGH from Defendants’ oral spray

product without injections, claiming that:

an oral delivery system has been developed. It takes advantage of the short

distance between the brain and the mouth so that HGH can pass through the

mucous membrane under the tongue into the blood vessels within seconds,

then it goes directly into the brain. It is quickly absorbed and works to

stimulate and reactivate the functions of the pituitary gland to secrete HGH

and other rejuvenating hormones.

The sites also represent that the oral sprays contain:

natural substances (secretagogues) which have been documented to increase

growth hormone naturally and may exceed the effectiveness of injection


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therapy. These natural secretagogues provide nutritional support for the

release of growth hormone from its sequestered state in the pituitary gland.

c. Under the heading, “Why We Need HGH,” the sites typically

list various conditions and claim that HGH will prevent, treat, or cure them. For

example, under “Osteoporosis,” the sites discuss the risks of lower bone density

and fractures associated with osteoporosis, then state, “The solution is to increase

the intake of HGH.” Under “Cardiovascular Disease,” the sites observe that the

occurrence of cardiovascular diseases greatly increases after menopause because

“bad (low density) cholesterol will grow while the good (high density) cholesterol

will diminish.” The sites claim that if one takes HGH, “the situation will be

reversed.” Similarly, the sites claim that, “As revealed by the medical report,

taking HGH will greatly reduce the potentiality of having Alzheimer disease.”

d. Under the heading, “How does it work,” the sites list other

purported benefits of the oral spray sold there.

i. Under the heading, “Elevate the Immune System,” the

sites state that “Hgh will help you improve the manufacture of new antibodies,

increases production of T-cells and interlukin 2, induces the proliferation of

disease fighting white blood cells, stimulates bacteria fighting macrophages and

improves production of red blood cells.”

ii. Under the heading, “Stabilize Mood-Swings,” the sites

state, “Hgh acts in your brain as an antidepressant, raising B-endorphin levels, the

brains [sic] own opiate, and lowering dopamine, which causes agitation.” They

also state that “Hgh can help you reduce stress [and] improve concentration.”

iii. Under the heading, “Burn Fat and Reduce Cellulite,” the

sites call HGH the “most effective anti-obesity ‘agent’ ever discovered,” claiming

that it “revs up the metabolism to former highs, selectively reducing the abdomen,

waist, thighs and hips, while at the same time increasing muscle mass.”


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iv. Under the heading, “Fitness and Bodybuilding,” the sites

state that “Hgh has been found to significantly increase the effects of exercise and

muscle building, including energy, muscle strength and endurance.”

v. Under the heading, “Memory Improvement,” the sites

state that HGH “can help to stimulate the rejuvenation and repair of your brain

cells” and that it “affects the proteins produced in the brain for storing your

memories.”

vi. Under the heading, “No more Sleeping Disorders,” the

sites state that HGH “can be a great help in balancing your sleeping pattern,”

helping users to “feel more rested in the morning,” and that “many report for the

first time in years they are able to sleep through the entire night.”

vii. Under the heading, “Furthermore,” the sites state that

“Hgh can also help to strengthen your bones, . . . improve your vision, lower the

cholesterol and blood pressure, improve your digestion, and quicken healing of

wounds and so much more.”

e. The sites typically include a chart headed, “Improvement Facts

in HGH.” The “facts” listed include “Body Fat loss 82%,” “Muscle strength

88%,” “Emotional stability 67%,” and “Memory 62%.”

f. These claims are reinforced by references to studies

purportedly proving the claimed benefits. Under the headings, “Doctors and

Research,” and “Reverse 10 to 20 years of aging,” the sites typically state:

The New England Journal of Medicine published the clinical findings

of Daniel Rudman, MD, regarding his . . . research on the anti-aging

effects of hgh. . . . After six months, Dr. Rudman observed a reversal

of the aging process from 10 to 20 years in the patients who received

hgh injections.

The Web sites typically also state:


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A recent outcome based hgh human growth hormone research study

of the oral spray we recommend, revealed that 75% of subjects

experienced a 41% average increase in IGF-1 levels (an indicator of

growth hormone levels). In addition, there was lowered cholesterol in

an average of 11% in 90% of the cases, and 80% of the subjects

experienced an average 29% reduction in tryglicerides (fat), reflecting

better overall health.

Additional purported findings of the study were that users experienced “loss of

body fat . . . without dieting or exercise,” “increase in lean muscle mass . . .

without exercise,” “Superior Immune Function,” “Stronger Bones,” “More Rapid

Healing,” and “Increased Memory Retention.” One doctor whose “study” is

referenced reportedly “guarantees a loss of 10 to 12 percent of body fat every six

months if they are overweight, and a gain of 8 to 10 percent in muscle mass every

six months, continuing every six months until body composition has reverted to

that of a twenty year old.”

23. To induce recipients to visit the Web sites and purchase Defendants’

oral spray products, unsolicited electronic mail messages promoting Web sites

operated by Defendants or their agents make various claims, including claims that

the products:

a. Stimulate the production of HGH;

b. Enable the user to burn fat without dieting or exercise;

c. Slow and reverse the aging process;

d. Increase muscle strength and size;

e. Increase energy and cardiac output;

f. Strengthen the heart muscle;

g. Improve vision;

h. Help eliminate depression;


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i. Strengthen the immune system, increase resistance to common

illness, and prevent disease;

j. Increase bone density;

k. Lower blood pressure;

l. Control cholesterol;

m. Quicken healing of wounds;

n. Have been proven by “studies,” “clinical evidence,” or

“[c]linical results based on trials” to produce such effects as an 84% increase in

energy level, an 88% improvement in muscle strength, an 81% increase in muscle

mass, expanded exercise tolerance/endurance of 81-83%, a 72% decrease in body

fat without diet or exercise, improved immune function of 73%, a 67%

improvement in mental stability, and a 62% improvement in memory.

24. Defendants or their agents take orders for their oral sprays over the

Internet. To order, consumers enter personal information called for by

Defendants’ order form, including their names, addresses, and credit card

numbers. The order form has appeared under this statement: “NOTE: To ensure

your personal privacy, all of the information that you submit to us after this point

will be secured using SSL encryption technology.” In numerous instances, these

Web sites’ home pages have also promised that “Online ordering is Secure.”

25. Defendants are “initiators” with respect to an email message when

they have either originated or transmitted a message themselves or have procured

the origination or transmission of a message through payments or other

consideration, or inducements.

26. Defendants are “senders” with respect to an email message when they

have initiated a message and it is Defendants’ products, services, or Web sites that

are being advertised or promoted by such message.

27. In numerous instances, Defendants have initiated commercial email

messages that contain materially false or misleading header information. In many


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instances, the email contains an originating email address that was not assigned by

the email service provider or was used without the authorization of the subscriber

who obtained the email address from the email service operator. In other

instances, the email message fails to identify accurately the protected computer

used to initiate the message because the email message was relayed or

retransmitted through another protected computer for purposes of disguising its

origin.

28. In numerous instances, in order to induce consumers to open and read

their commercial emails, Defendants have initiated commercial email messages

that contain subject headings that misrepresent the content or subject matter of the

message.


messages that fail to include a clear and conspicuous identification that the

message is an advertisement or solicitation.

30. In numerous instances, Defendants’ commercial email messages fail

to include any notification to recipients of their ability to decline receiving future

email messages from Defendants. These email messages further fail to include a

reply email address or other Internet-based mechanism that recipients can use to

decline receiving future email messages from Defendants. In other instances,

Defendants’ commercial email messages include only vague indications of

recipients’ rights to decline receiving future email messages from Defendants.


messages that fail to include a valid physical postal address of the sender.

VIOLATIONS OF SECTIONS 5 AND 12 OF THE FTC ACT

32. Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits unfair or

deceptive acts or practices in or affecting commerce. Section 12(a) of the FTC

Act, 15 U.S.C. § 52(a), prohibits the dissemination of any false advertisement in or

affecting commerce for the purpose of inducing, or which is likely to induce, the


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purchase of food, drugs, devices, or cosmetics. For purposes of Section 12 of the

FTC Act, the oral sprays sold by Defendants are either “food,” “drugs” or

“devices” as defined in Sections 15(b), (c) and (d) of the FTC Act, 15 U.S.C.

§§ 55(b), (c) and (d). As set forth below, Defendants have engaged in and are

continuing to engage in such unlawful practices in connection with the marketing

and sale of HGH Revolution, Natural Rejuvenator, and oral sprays marketed under

other names. Defendants represent that these products contain HGH, cause an

increase in the body’s growth hormone level, or cause effects purportedly similar

to those caused in nature by HGH.

COUNT I

33. Through the means described in Paragraphs 18-23, Defendants have

represented, expressly or by implication, directly or through their agents, that their

oral spray products:

a. Contain human growth hormone and/or cause a statistically

significant and clinically meaningful increase in a consumer’s growth hormone

levels;

b. Enable the consumer to lose weight, or replace fat with muscle,

without diet or exercise;

c. Will turn back or reverse the aging process, including, but not

limited to, representing that the products will (i) increase energy levels, stamina,

and muscle strength; (ii) restore the size of bodily organs that shrink with age

(e.g., liver, pancreas and heart); and (iii) improve memory; and

d. Prevent, treat, or cure various diseases and medical conditions,

including, but not limited to, representing that the products will (i) strengthen or

elevate the immune system; (ii) reduce the risk of having Alzheimer’s disease;

(iii) increase bone density; (iv) prevent or act as a solution to osteoporosis;

(v) eliminate joint pains; (vi) lower cholesterol; (vii) lower or normalize blood

pressure; (viii) improve cardiovascular and respiratory functions and reduce the


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occurrence of cardiovascular diseases; (ix) improve vision; (x) stabilize mood

swings and act as an antidepressant; (xi) help heal wounds; and (xii) eliminate

sleep disorders.

34. In truth and in fact, Defendants’ oral spray products:

a. Do not contain human growth hormone or cause a statistically

significant or clinically meaningful increase in a consumer’s growth hormone

levels;

b. Do not enable the consumer to lose weight, or replace fat with

muscle, without diet or exercise;

c. Do not turn back or reverse the aging process, and do not

(i) increase energy levels, stamina, and muscle strength; (ii) restore the size of

bodily organs that shrink with age (e.g., liver, pancreas and heart); or (iii) improve

memory; and

d. Do not prevent, treat or cure diseases or medical conditions,

and do not (i) strengthen or elevate the immune system; (ii) reduce the risk of

having Alzheimer’s disease; (iii) increase bone density; (iv) prevent or act as a

solution to osteoporosis; (v) eliminate joint pains; (vi) lower cholesterol;

(vii) lower or normalize blood pressure; (viii) improve cardiovascular and

respiratory functions and reduce the occurrence of cardiovascular diseases;

(ix) improve vision; (x) stabilize mood swings and act as an antidepressant;

(xi) help heal wounds; and (xii) eliminate sleep disorders.

35. Therefore, Defendants’ representations as set forth in Paragraph 33

above are false or misleading and constitute a deceptive practice, and the making

of false advertisements, in or affecting commerce, in violation of Sections 5(a) and

12 of the FTC Act, 15 U.S.C. §§ 45(a) and 52.


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COUNT II

36. Through the means described in Paragraphs 18-23, Defendants have

represented, expressly or by implication, directly or through their agents, that their

oral spray products:

a. Contain human growth hormone or cause a statistically

significant or clinically meaningful increase in a consumer’s growth hormone

levels;

b. Enable the consumer to lose weight, or replace fat with muscle,

without diet or exercise;

c. Will turn back or reverse the aging process, including, but not

limited to, representing that the products will (i) increase energy levels, stamina,

and muscle strength; (ii) restore the size of bodily organs that shrink with age

(e.g., liver, pancreas and heart); and (iii) improve memory; and

d. Prevent, treat, or cure various diseases and medical conditions,

including, but not limited to, representing that the products will (i) strengthen or

elevate the immune system; (ii) reduce the risk of having Alzheimer’s disease;

(iii) increase bone density; (iv) prevent or act as a solution to osteoporosis;

(v) eliminate joint pains; (vi) lower cholesterol; (vii) lower or normalize blood

pressure; (viii) improve cardiovascular and respiratory functions and reduce the

occurrence of cardiovascular diseases; (ix) improve vision; (x) stabilize mood

swings and act as an antidepressant; (xi) help heal wounds; and (xii) eliminate

sleep disorders.

37. Defendants did not possess and rely upon a reasonable basis that

substantiated the representations set forth in Paragraph 36 above at the time the

representations were made.

38. Therefore, the making of the representations set forth in Paragraph 36

above constitutes a deceptive practice, and the making of false advertisements, in


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or affecting commerce, in violation of Sections 5(a) and 12 of the FTC Act,

15 U.S.C. §§ 45(a) and 52.

COUNT III

39. Through the means described in Paragraphs 21.d, 22.f, and 23.n,

Defendants have represented that scientific research, including research published

in the New England Journal of Medicine, proves that Defendants’ oral spray

products will produce the following effects, among others:

a. an increase in consumers’ growth hormone levels;

b. a decrease in body fat, without diet or exercise;

c. an increase in muscle mass, without exercise;

d. improved immune function;

e. more rapid healing;

f. stronger bones;

g. lower cholesterol;

h. normalized blood pressure;

i. improved vision; and

j. improved memory.

40. In truth and in fact, scientific research, including research published

in the New England Journal of Medicine, has not proven that Defendants’ oral

spray products will produce the effects claimed by Defendants.

41. Therefore, the representations set forth in Paragraph 39 above are

false or misleading and constitute a deceptive practice, and the making of false

advertisements, in or affecting commerce, in violation of Sections 5(a) and 12 of

the FTC Act, 15 U.S.C. §§ 45(a) and 52.

COUNT IV

42. Through the means described in Paragraph 24, Defendants in

numerous instances, expressly or by implication, directly or through their agents,

represent that the order pages of Web sites marketing Defendants’ products are


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secured using SSL encryption technology and that credit card numbers and other

personal information entered by consumers on the order pages and submitted to

Defendants cannot be seen by others when transmitted.

43. In truth and in fact, in numerous instances the order pages on the Web

sites marketing Defendants’ products do not support encryption, and information

transmitted via these order forms is not secure and is at risk of being seen by

others during transmission.

44. Therefore, the making of the representations set forth in Paragraph 42

above constitutes a deceptive practice in or affecting commerce in violation of

Section 5(a) of the FTC Act, 15 U.S.C. §§ 45(a).

VIOLATIONS OF THE CONTROLLING THE ASSAULT OF

NON-SOLICITED PORNOGRAPHY AND MARKETING ACT OF 2003

45. The Controlling the Assault of Non-solicited Pornography and

Marketing Act of 2003 (“CAN-SPAM”), 15 U.S.C. § 7701, et seq., became

effective on January 1, 2004, and has since remained in full force and effect.

46. Section 5(a)(1) of CAN-SPAM, 15 U.S.C. § 7704(a)(1), states:

It is unlawful for any person to initiate the transmission, to a

protected computer, of a commercial electronic mail message . . . that

contains, or is accompanied by, header information that is materially

false or materially misleading.


For purposes of paragraph (1) [15 U.S.C. § 7704(a)(1)], the term

“materially,” when used with respect to false or misleading header

information, includes the alteration or concealment of header

information in a manner that would impair the ability of an Internet

access service processing the message on behalf of a recipient, a

person alleging a violation of this section, or a law enforcement

agency to identify, locate, or respond to a person who initiated the


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electronic mail message or to investigate the alleged violation, or the

ability of a recipient of the message to respond to a person who

initiated the electronic message.


It is unlawful for any person to initiate the transmission to a protected

computer of a commercial electronic mail message if such person has

actual knowledge, or knowledge fairly implied on the basis of

objective circumstances, that a subject heading of the message would

be likely to mislead a recipient, acting reasonably under the

circumstances, about a material fact regarding the contents or subject

matter of the message (consistent with the criteria used in

enforcement of section 5 of the Federal Trade Commission Act (15

U.S.C. § 45)).

49. Section 7(e) of CAN-SPAM, 15 U.S.C. § 7706(e), states that in any

action to enforce compliance, through an injunction, with Sections 5(a)(1)(c),

5(a)(2), and other specified sections of CAN-SPAM, the FTC need not allege or

prove the state of mind required by such sections.

50. Section 5(a)(3)(A) of CAN-SPAM, 15 U.S.C. § 7704(a)(3)(A), states:

It is unlawful for any person to initiate the transmission to a protected

computer of a commercial electronic mail message that does not

contain a functioning return electronic mail address or other Internet-

based mechanism, clearly and conspicuously displayed, that-

(i) a recipient may use to submit, in a manner specified in

the message, a reply electronic mail message or other form of

Internet-based communication requesting not to receive future

commercial electronic mail messages from that sender at the

electronic mail address where the message was received; and

(ii) remains capable of receiving such messages or


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communications for no less than 30 days after the transmission

of the original message.

51. Section 5(a)(5)(A) of CAN-SPAM, 15 U.S.C. § 7704(a)(5)(A), states:

It is unlawful for any person to initiate the transmission of any

commercial electronic mail message to a protected computer unless

the message provides-

(i) clear and conspicuous identification that the message

is an advertisement or solicitation;

(ii) clear and conspicuous notice of the opportunity

under [section 5(a)(3), 15 U.S.C. § 7704(a)(3)] to decline to

receive further commercial electronic mail messages from the

sender; and

(iii) a valid physical postal address of the sender.

52. Section 7(a) of CAN-SPAM, 15 U.S.C. § 7706(a), states:

[T]his chapter shall be enforced by the Commission as if the violation

of this chapter were an unfair or deceptive act or practice proscribed

under section 18(a)(1)(B) of the [FTC Act] (15 U.S.C.

§ 57a(a)(1)(B)).

COUNT V

53. Through the means described in Paragraphs 25-27, Defendants in

numerous instances have initiated the transmission, to protected computers, of

commercial email messages that contained, or were accompanied by, header

information that was materially false or misleading.

54. Defendants’ acts or practices, as described in paragraph 53 above,

violate 15 U.S.C. § 7704(a)(1).


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COUNT VI

55. Through the means described in Paragraphs 25-26 and 28, Defendants

in numerous instances have initiated the transmission, to protected computers, of

commercial email messages that contained subject headings that would be likely to

mislead a recipient, acting reasonably under the circumstances, about a material

fact regarding the contents or subject matter of the message.


violate 15 U.S.C. § 7704(a)(2).

COUNT VII

57. Through the means described in Paragraphs 25-26 and 30, Defendants

in numerous instances have initiated the transmission, to protected computers, of

commercial email messages that advertise or promote Defendants’ Internet Web

sites, products or services, and do not include:

a. a clear and conspicuous notice of the recipient’s opportunity to

decline to receive further commercial electronic mail messages from Defendants at

the recipient’s electronic mail address; and/or

b. a functioning return electronic mail address or other Internet-

based mechanism, clearly and conspicuously displayed, that a recipient could use

to submit a reply electronic mail message or other form of Internet-based

communication requesting not to receive future commercial electronic mail

messages from Defendants at the electronic mail address where the message was

received, and that remains capable of receiving such messages or communications

for no less than 30 days after the transmission of the original message.


violate 15 U.S.C. § 7704(a)(5)(A)(ii) and/or § 7704(a)(3).


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COUNT VIII

59. Through the means described in Paragraphs 25-26, 29, and 31,

Defendants in numerous instances have initiated the transmission, to protected

computers, of commercial email messages that advertise or promote Defendants’

Internet Web sites, products or services and fail to include clear and conspicuous

identification that the message is an advertisement or solicitation and/or the

sender’s valid physical postal address.


violate 15 U.S.C. § 7704(a)(5)(i) and (iii).

CONSUMER INJURY

61. Individuals and businesses throughout the United States and beyond

have suffered, and continue to suffer, substantial monetary loss and other injury as

a result of Defendants’ unlawful acts and practices. In addition, Defendants have

been unjustly enriched as a result of their unlawful acts and practices. Absent

injunctive relief by this Court, Defendants are likely to continue to injure

consumers and businesses, reap unjust enrichment, and harm the public interest.

THIS COURT’S POWER TO GRANT RELIEF

62. Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and 57b,

empower this Court to grant injunctive and other ancillary equitable relief to

prevent and remedy Defendants’ violations of the FTC Act, and in the exercise of

its equitable jurisdiction, to award redress to remedy the injury to individuals and

businesses, to order the disgorgement of monies resulting from Defendants’

unlawful acts or practices, and to order other ancillary equitable relief. A violation

of CAN-SPAM may be remedied in the same manner as a violation of the FTC

Act. 15 U.S.C. § 7706.


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PRAYER FOR RIELIEF

WHEmFORE, Plaintiff FTC, pursuant to Sections 13(b) and 19 of the FTC

Act, 15 U.S.C. $8 53(b) and 57b, Sections 7(a), 7(d), and 7(e) of the CAN-SPAM Act, 15 U.S.C. $ 7706(a), (d), and (e), and the Court's own equitable powers,

requests that this Court:

1. Enter an order enjoining Defendants preliminarily and permanently

from violating Sections 5 and 12 of the FTC Act, the CAN-SPAM Act, and

freezing Defendants' assets;

2. Award such relief as the Court finds necessary to address injury

resulting from Defendants' violations of the FTC Act and the CAN-SPAM Act,

including, but not limited to, rescission of contracts, restitution, redress,

disgorgement of ill-gotten gains, and the refund of monies paid; and

3. Award Plaintiff the costs of bringing this action, as well as such other

and additional relief as the Court may determine to be just and proper.

Respectklly submitted,

WILLIAM BLUMENTHAL General Counsel

CHARLES A. HARWOOD Regional Director

Dated: 6 , l iTd < A && 3 - -&?-dt9 MAXINE R. STANSELL, WSBA # 9418 MARY T. BENFIELD, WSBA # 18835

Attorneys for Plaintiff Federal Trade Commission

FEDERAL TRADE COMMISSION 915 Second Avc .Su 2896 Sentrle. Washtngton 98 174COMPLAINT - Page 23 (206) 220-6350

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11 General Counsel...1 WILLIAM BLUMENTHAL ,.11 General Counsel MAXINE R. STANSELL 3 MARY T. BENFIELD Federal Trade Commission 4 915 Second Ave.. Suite 2896 JOHN D. JACOBS CA Bar No